Constantia CEO: "We want to be the best"

2016-04-06

The Austrian newspaper "der Standard" published an interview with CEO Alexander Baumgartner

The renowned Austrian newspaper "der Standard" interviewed Constantia Flexibles CEO Alexander Baumgartner - the interview was published today. The CEO speaks about future plans of the company and growth plans - and the desire to be the best in class when it comes to flexible packaging and customer service.

Quality rather than quantity, expansion through acquisition – especially in Southeast Asia and the USA. This is how Alexander Baumgartner, the CEO of Constantia Flexibles, wants to make the packaging manufacturer fit for the future.

Interview: Günther StroblStandard: Do we have the wrong impression or has Constantia Flexibles subscribed to continuous growth?

Baumgartner: Growth is a very important factor in our industry. Regardless of whether this concerns personnel, logistics or – in the long term – energy: costs are always increasing. We are dependent on growth in order to counteract the rise in fixed costs. There is no guarantee of growth, but we are in the fortunate position of being in the packaging industry, which simply grows faster than other classic industries.Standard: Population growth and increasing living standards seem to be important driving forces.

Baumgartner: Yes, the mega-trends contribute to growth. Another factor is that existing rigid packaging materials are being substituted for flexible solutions. Things that used to be packaged in glass or large plastic containers are now increasingly being put into flexible containers. Think of yogurt: when we were children, yogurt mostly came in a glass; this has now been replaced by plastic cups with aluminium lids.

Standard: The more people earn, the more products are purchased that are packaged by Contantia Flexibles?

Baumgartner: Correct, although worldwide we see the most potential in emerging markets.

Standard: Different estimates have been made by analysts with regard to the economy. What are your findings? Almost no-one is as close to the market as you.

Baumgartner: There is no single finding. In Europe, we have a low single-digit percentage growth for flexible packaging, in North America, we have a medium single-digit percentage growth, and in individual markets in Asia and Africa, we have clear double-digit percentage growth.

Standard: What is your growth strategy for the next ten years?

Baumgartner: We are in the process of working on this. Our new majority shareholder, the French Wendel Group, is very much focused on the long term, as are the Turnauer and the RAG Private Foundations. Contrary to this, our former owners One Equity Partners pursued a clear exit strategy – a stock exchange listing or sale within five years.

Standard: Do the French support your plans?

Baumgartner: Very much so. In the six months that I have been working here, my main task was to bring calm into the organisation. The company has had a tumultuous couple of years – an attempted stock exchange listing, then new owners – all while expanding globally.

Standard: Did this cause uncertainty among the employees?

Baumgartner: Yes, but the organisation and the company culture are strong and this phase has passed. We aim to continue our global growth. Not rapidly, but step by step. Our main focus is on the USA and India.

Standard: What are your goals regarding revenues and returns?

Baumgartner: We are in the process of defining that. Our goal is to achieve profitable growth; we want to be the best in our field. We increased profits in 2015, but our margin went down by 0.8 percent. We have to correct that.

Standard: What do you prefer – organic growth or acquisitions?

Baumgartner: Both. We want to further develop the existing plants and client relationships, as well as making acquisitions. We will achieve most progress with the latter.

Standard: You mentioned two-digit percentage growth in parts of Asia and Africa. However, you do not have many production plants in these areas.

Baumgartner: In the East, our primary focus is on India and Southeast Asia. We are counting on these markets. Today, we achieve revenues of almost EUR 100m there. Our acquisition of Afripack was a big step forward in Africa. We also see good growth opportunities in South America, despite the current weakness of the economy. However, at the moment we only have a strong presence in Mexico.

Standard: Have you already identified target companies there for acquisition?

Baumgartner: We are still looking. The flexible packaging industry is considerably fragmented. There are a lot of family businesses that have revenues in the tens of millions. These companies frequently are on the lookout for a strong global partner. Many contact us and we are also conducting an active search. I assume that we will announce one or other takeover this year.

Standard: In the medium term, could there be a fourth division besides Food, Labels and Pharma, which balances out the economic cycle?

Baumgartner: At the moment, there are no plans. However, a business could come to us via an acquisition, from which it would make sense to form a new division. As far as the cycle is concerned, we are currently active in many areas. We operate in the pharmaceutical industry, in the beverages industry with labels and in the yogurt, animal feed, confectionery and snacks businesses. These cycles balance each other out well. There is still potential in the Home and Personal Care businesses.

Standard: Would Wendel by willing to inject more capital in the event of a larger acquisition?

Baumgartner: Of course, we must mainly earn our own money. But if there are big issues that make strategic sense, Wendel and the other two owners are strong partners to have and have an open ear.

ALEXANDER BAUMGARTNER (51) was appointed CEO of Constantia Flexibles in October 2015. The French Wendel holds the majority of the shares in the leading manufacturer of flexibles packaging. The other shareholders are the Turnauer and the RAG Private Foundations. Baumgartner, a graduate of the Vienna University of Economics and Business (Wirtschaftsuniversität, WU), has two children. In his leisure time, he likes to ski and cycle. Constantia Flexibles manufactures in 54 locations in 23 countries. The group employs around 10,000 employees, of which 1380 are in Austria.